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South African mine supply remains vulnerable to further power generating problems, although Eskom appears to have eased the situation temporarily. Mine supply from outside South Africa is constrained in the short term, although we are forecasting a rise in recycling volumes, said Cross.

According to the report, autocatalyst demand for platinum will ease to 3.6 million ounces from 3.7 million ounces on substitution for palladium and weaker European car sales. Jewellery demand for platinum is expected to fall from 1.7 million ounces to 1.5 million ounces as higher prices take their toll.

Most of the market adjustment therefore will need to come from either lower consumer demand or increased investor dishoarding (stock sales), said Cross. We believe jewellery sales will be hit by the high and volatile prices in the market, but overall demand will remain strong enough to see another year of deficit for platinum, at 360,800 ounces.

ETF demand in platinum is likely to set new records, with an additional 300,000 ounces of platinum in 2008. Investors have already added 180,000 to platinum ETF holdings this year. Zurich Cantonal Bank s platinum fund currently holds about 43,250 ounces, while ETF Securities fund now holds nearly 340,000 ounces.

Three other noteworthy reports on PGM supply and demand are schedule to be released in the next few months by GFMS (April 24), Johnson Matthey (May 19) and CPM Group (June 29). Stay tuned for full coverage.

In the meantime, readers can review RI s previous coverage of Johnson Matthey s Platinum 2007 Interim Review, GFMS Platinum and Palladium Survey 2007 and CPM Group s The Platinum Group Metals Yearbook 2007.

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